Open market distributors, also known as independent distributors, represent 10 to 15 percent of the $160B electronic semiconductor distribution market.
There are many benefits to partnering with an open market distributor of electronic components, like shorter lead times and enhanced pricing flexibility. In this post, we’ll cover what open market distributors are, how they differ from other sourcing options, and the benefits they offer.
What Are Open Market Distributors of Electronic Components?
There are many places to source electronic parts. One option is sourcing directly from the factory, which may provide price discounts for buying in bulk or rewards for loyalty. This can also help you forge a stronger relationship, and thus have more influence, with the supplier. However, this comes with all the risks of sole sourcing. The supplier has more negotiating power on price because you have no other options to compete with them. And if the supplier is disrupted by a natural disaster or geopolitical tensions, for example, you’re going to feel the effects. Franchised distributors purchase parts directly from the factory, then resell to end users. This can help you avoid a large minimum buy required by the manufacturer. But, as with buying directly from the factory, you’re still limited to a single company. There may be pools of unused inventory elsewhere around the globe, but you have no way of accessing them.
Brokers, another source for parts, can help connect you with hard-to-find parts, but they tend to inflate their prices. They’ve also earned a reputation for compromising on quality, because they often don’t have the inspection equipment needed to meet industry standards. This is where open market distributors, also known as independent distributors, come in. Open market distributors of electronic components work with suppliers and customers around the globe to match demand with inventory. Unlike franchises, OMDs sell products from a variety of manufacturers and locations. Unlike brokers, OMDs don’t buy parts at a discount and resell them later—instead, they connect suppliers who have inventory with customers who need it. Open market distributors form a trusted global network of electronic component manufacturers and perform thorough inspections to ensure quality.
Why Choose an Open Market Distributor?
There are many benefits to sourcing electronic components through an Open Market Distributor.
Pricing & Lead Time Advantages
When you work with an OMD, you get access to a wide variety of sourcing options for electronic components. They focus on building relationships with all of their suppliers so you don’t have to. Because OMDs build a large network of trusted suppliers, they can match unused inventory with customers looking for hard-to-source parts, no matter where the two are located. This translates to more price flexibility and shorter lead times for their customers.
Market Intelligence
Open Market Distributors of electronic components offer unmatched market intelligence. Their position in the electronics industry gives them real-time insights into market trends. The best OMDs also use various news channels and data analytics tools to build a comprehensive picture of the market. On-the-ground info is also critical to predicting trends. Open market distributors’ relationships with suppliers around the globe helps them keep their fingers on the pulse of the electronics market. This means when you partner with an OMD, it’s easy to stay in front of market trends.
Insulation from Market Disruptions
When the market shifts, open market distributors’ broad networks help insulate them—and thus their customers. If a natural disaster shuts down one manufacturer or geopolitical tensions cut off all suppliers in a given country, an OMD has other sources to fill the gap.
Open market distributors specialize in obsolete and hard-to-find electronic components, making them a critical asset during shortages, EOL markets, and other disruptions. The best OMDs have a global presence, with multiple sites in key locations and strong regional relationships that help them quickly adapt to market shifts. They also have experience with tariffs and customs processes, which helps avoid costly paperwork mistakes in international purchases.
Quality First
Open market distributors of electronic components set themselves apart from brokers by prioritizing quality and transparency. Leading OMDs have the necessary inspection equipment and certifications to not only meet industry standards, but exceed them. They also offer 24/7 customer support, and welcome their customers to tour their facilities or conduct audits.
In the wake of the pandemic, there has been a shift in purchasing approaches. Customers are favoring more of a hybrid approach to supply management and procurement. It is likely they will continue to utilize supply chain models that combine direct, legacy distribution, as well as open market distributors. But, unlike other sources of supply, OMDs can help customers cut costs and lead times without sacrificing quality.
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